Accounting FINAL
the current portion of a long-term debt would appear on the balance sheet as
a current liability
what are some features regarding bonds payable?
a liability that can be sold at face value, premium, or discount.
a capital lease liability would appear on the balance sheet as
both a current liability and long term liability
convertible bond
can be converted to common stock at the option of the bondholder
interest rate printed on the bond certificate
stated rate, or what the company pays
issued shares represent
the number of shares sold
why are convertible bonds attractive to bondholders?
they can make more money by switching to common stock
which accounts would NOT be classified as a current liability account?
those due after 12 months
a bad issuing at 102.50 means that $1,000 bond sold at what price?
1000 X 1.025= 1025
a current liability includes obligations which must be repaid within what time period ?
12 months
callable bond
can be paid off early by the company
when bonds are issued at a premium, the accounting entry would be what?
cash, bonds payable, premium
what are the lease conditions in a capital lease to the lessee?
contains a margin purchase option and the lease term is at least 75% of the assets useful life
long-term debt generally includes what items?
liabilities due after 12 months
what is the impact on the accounting equation of recording a purchase and a payment on account?
for purchase it would increase an asset and liability or decrease equity and liability
characteristics regarding accounts payable?
free credit, no interest, results from everyday credit purchases
what is the impact on the accounting equation of recording the accrual of wages expense?
increase liability and decrease equity
authorized stock represents
maximum number of shares allowed to be sold
treasury shares represent
number of shares that the company has repurchased
an example of a current liability the must be accrued is
payroll, accrued expenses, inventory purchases
what are the elements of stockholder's equity?
preferred stock, common stock, retained earnings
why is preferred stock preferred?
stockholders get paid first for dividends and in liquidation
outstanding shares represent
the number of shares sold that are still owned by stockholders
bonds sell at a premium when what happens?
the stated rate is more than the market rate